A Review of the Nigerian Energy Industry

NNPC’s wasteful spending on charter flights

NNPC Towers
NNPC Towers

12 July 2015, Abuja – The recent media report that the frivolous practice of hiring jets for billions of Naira by top executives of the Nigeria National Petroleum Corporation (NNPC) for routine trips is still continuing after it was frowned at by lawmakers is an act of impunity that should not be allowed to continue.

During the 7th session of the National Assembly, the matter caused a national uproar when on March 21, 2015 a member revealed during a House of Representatives session that the then Minister of Petroleum Resources Mrs. Diezani Allison-Madueke had spent N10bn to charter and maintain a jet for her personal use within two years. The House then ordered an investigation in to the matter. The minister failed to attend the committee hearing and instead filed a court action seeking to stop the investigation.

Six months later, the NNPC signed another contract for €6, 8000,000 (N1.6bn) for an executive jet hire for its top management staff and other VIPs. This contract which was approved by the Group Executive Committee (GEC) on October 15, 2015 also authorized the establishment of a fully funded escrow account to provide payment security to the contractor.

Media reports revealed that Salma-Forte Limited, a Nigerian registered aviation company and an affiliate of VistaJet Group of Austria, has been engaged to provide executive jet charter services with a challenger 850 aircraft. However, prior to the deal with Salma-Forte, Aero Contractors had managed the Corporation’s owned jets and helicopters.

Mr. Samuel Adejare from Agege federal constituency in Lagos State who raised the allegation against Diezani in March said the minister had committed at least N3.120bn to maintain the private jet used solely by her and her immediate family; alleging that other wasteful costs associated with the minister’s frequent trips included payment of allowances to crew members for trips, hanger parking, and rents based on the lease agreement. This expenditure cannot be more wasteful at a time when oil revenues are dwindling. Honourable Adejare observed that it was a breach of public trust for a government official to travel in chartered flights especially for reasons that are more of leisure than official.

In a recent press interview, Diezani reacted to the allegations made against her by the House of Representatives. She argued that nobody can lease a jet for N10bn over a period. Diezani described the allegation as nonsensical; insisting that the NNPC leased those jets because at that time they had no official planes. She added that the aircrafts were leased for executive movement and operations and not for her personal use. Diezani stated that the allegation was a mere fabrication that was intended to blackmail her “as if nobody had done that before in the annals of the NNPC”.

It would be recalled that the NNPC had six helicopters and two executive jets including the Hawker 4000 which had an accident. In July 2014, the NNPC directed that all its aircraft and helicopters be sold off. The explanation offered by the corporation that it was changing the philosophy regarding its aviation services from ownership and maintenance to spot charter in order to “save cost and secure operational excellence” is a pretext too weak to justify the needless wastage of the country’s resources. The spot charter is rather a ploy, in the name of aviation services, to fraudulently enrich some individuals or group. Charter services as profiteering as operated in Nigeria cannot be more cost-effective than when the NNPC owned and operated its own fleet of aircrafts.

Over the years, authorities at the NNPC in collaboration with the Department of Petroleum Resources (DPR) have been managing the country’s oil proceeds as if such were the exclusive preserve of public officers working in the oil industry. This explains why the NNPC has never considered its profligate expenditures as anything gratuitous. Similarly, the inexcusable pattern of wasteful spending by the NNPC may have sprout from its long standing misconception that returns from the sale of oil must be ploughed back in to the industry.

Government must be seen to be proactive in its resolve to stop this culture of squandering of public funds. NNPC officials should also realize that operations of the corporation must not be exclusive of the Financial Regulations that govern public enterprises. The fact that a wrong was done by a previous management of the NNPC should not be an excuse for its perpetration.
*Daily Trust

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